What can we expect from Polkadot price in the near future? (DOT Price Analysis)

Polkadot buyers were unable to rise above the critical resistance at $7.5, leading to a significant 7% decline due to increased selling pressure.

The cryptocurrency has now reached a decisive support level, and future price action will be crucial in determining the future trend of Polkadot.

Technical analysis

By Shayan

The daily chart

A detailed analysis of daily charts reveals that Polkadot buyers failed to reclaim a key resistance area for several weeks. This zone includes the 100-day moving average at $7.6 and the price range between the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels. Resistance comes with substantial supply, likely due to aggressive short positions in perpetual markets.

This intensified selling activity led to a 7% drop in the price of Polkadot, indicating bearish market sentiment. However, the price reached a crucial support zone near the $6.5 level.

This range is filled with demand and could counter current selling pressure and halt further declines. If this crucial support is crossed unexpectedly, the downtrend will likely continue in the medium term.

The 4-hour chart

On the 4-hour chart, Polkadot price formed an ascending wedge pattern during the recent multi-month consolidation phase. After being rejected at the important resistance level of $7.5, the price declined sharply, breaking through the lower boundary of the wedge. This breakout led to the liquidation of many long positions, causing a cascading effect towards the $6.5 mark.

The price has now reached a critical support region around the $6.5 level, which includes previous daily major lows. A period of consolidation near this crucial support is likely before the next significant move.

Sentiment analysis

By Shayan

Currently, Polkadot is going through a period of slight consolidation near the $6.5 mark after experiencing a significant decline. Analyzing futures market metrics, particularly the Binance DOT/USDT Liquidation Heatmap, offers valuable insights into potential price movements and liquidity pools.

The heatmap indicates that due to the recent sharp decline, the price has absorbed considerable liquidity, mainly between $6.5 and $6, leading to the liquidation of many long positions. Notably, there are no substantial liquidity levels below the $6 mark. This generally indicates a cooling off period in the futures market.

However, there is significant liquidity near the $8 level, suggesting that it could act as a resistance level. Therefore, if there is a bullish resurgence in the medium term, this zone will likely be the main target for buyers to recover.